B-171343, APR 26, 1971, 50 COMP GEN 753

B-171343: Apr 26, 1971

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CONTRACTS - PROTESTS - PERSONS QUALIFIED TO PROTEST THE DISCARDING OF ALL BIDS FOR THE MOVEMENT OR STORAGE OF PERSONAL PROPERTY BY A NAVAL INSTALLATION UPON DISCOVERING THAT AN ITEM IN ONE OF THREE SERVICE SCHEDULES WAS 100 PERCENT OVERSTATED IN THE INVITATION FOR BIDS WAS A PROPER ADMINISTRATIVE DETERMINATION PURSUANT TO PARAGRAPH 2- 404.1(B) OF THE ARMED SERVICES PROCUREMENT REGULATION. AS ANY BIDDER MAY PROPERLY BRING TO THE ATTENTION OF THE CONCERNED GOVERNMENT OFFICIALS ANY FACTOR INDICATING THAT A PARTICULAR PROCUREMENT ACTION IS DEFECTIVE. THE NECESSARY ICC AUTHORITY IN ITS OWN NAME AS REQUIRED BY THE INVITATION FOR BIDS (IFB) FOR THE MOVEMENT OR STORAGE OF HOUSEHOLD EFFECTS AND THEREFORE WOULD HAVE TO RELY ON SUBCONTRACTORS TO FURNISH THE SERVICES IT COULD NOT PERFORM IS A NONRESPONSIVE BIDDER.

B-171343, APR 26, 1971, 50 COMP GEN 753

CONTRACTS - PROTESTS - PERSONS QUALIFIED TO PROTEST THE DISCARDING OF ALL BIDS FOR THE MOVEMENT OR STORAGE OF PERSONAL PROPERTY BY A NAVAL INSTALLATION UPON DISCOVERING THAT AN ITEM IN ONE OF THREE SERVICE SCHEDULES WAS 100 PERCENT OVERSTATED IN THE INVITATION FOR BIDS WAS A PROPER ADMINISTRATIVE DETERMINATION PURSUANT TO PARAGRAPH 2- 404.1(B) OF THE ARMED SERVICES PROCUREMENT REGULATION, NOTWITHSTANDING THE PROTESTING BIDDER MAY NOT BE A QUALIFIED BIDDER, AS ANY BIDDER MAY PROPERLY BRING TO THE ATTENTION OF THE CONCERNED GOVERNMENT OFFICIALS ANY FACTOR INDICATING THAT A PARTICULAR PROCUREMENT ACTION IS DEFECTIVE. ALSO SINCE THE REISSUED INVITATION CONTAINED AN ERRONEOUS WEIGHT ESTIMATE AND MISSTATED THE ACTUAL OPERATING AUTHORITIES NECESSARY TO PERFORM THE SOLICITED SERVICES, THIS SECOND INVITATION, TOO, MAY BE CANCELED. BIDDERS - QUALIFICATIONS - LICENSE REQUIREMENT - BIDDERS NOT LICENSED PRIOR TO BIDDING A BIDDER WHO COULD NOT CERTIFY THAT IT HAD OR COULD OBTAIN PRIOR TO AWARD, THE NECESSARY ICC AUTHORITY IN ITS OWN NAME AS REQUIRED BY THE INVITATION FOR BIDS (IFB) FOR THE MOVEMENT OR STORAGE OF HOUSEHOLD EFFECTS AND THEREFORE WOULD HAVE TO RELY ON SUBCONTRACTORS TO FURNISH THE SERVICES IT COULD NOT PERFORM IS A NONRESPONSIVE BIDDER, NOTWITHSTANDING THE SUBCONTRACTING CLAUSE OF THE IFB PERMITS A QUALIFIED BIDDER AFTER OBTAINING AN AWARD TO SUBCONTRACT WITH THE PRIOR APPROVAL OF THE CONTRACTING OFFICER AS THE SUBCONTRACTING CLAUSE DOES NOT PURPORT TO MODIFY THE REQUIREMENT THAT THE PROSPECTIVE CONTRACTOR POSSESS THE NECESSARY OPERATING AUTHORITY PRIOR TO AWARD. HOWEVER, SINCE AWARD IS RECOMMENDED TO THE BIDDER UNABLE TO COMPLY WITH THE 100 PERCENT OPERATING AUTHORITY REQUIREMENT, THE REQUIREMENT APPEARS UNESSENTIAL AND UNDULY RESTRICTIVE OF COMPETITION AND, THEREFORE, THE IFB SHOULD BE CANCELED AND RESOLICITED.

TO THE SECRETARY OF THE NAVY, APRIL 26, 1971:

REFERENCE IS MADE TO A LETTER DATED FEBRUARY 1, 1971, SUP 0232, FROM THE DEPUTY COMMANDER, PURCHASING, NAVAL SUPPLY SYSTEMS COMMAND, FURNISHING OUR OFFICE A REPORT RELATIVE TO THE PROTEST OF AMERICAN MOVING AND STORAGE COMPANY OF MARIN (AMERICAN), IN CONNECTION WITH THE CANCELLATION OF A PORTION OF IFB NO. N66314-71-B-0528 AND READVERTISEMENT UNDER IFB NO. N66314-71-B-1148, BOTH OF WHICH WERE ISSUED BY THE NAVAL REGIONAL PROCUREMENT OFFICE, NAVAL SUPPLY CENTER, OAKLAND, CALIFORNIA.

IT IS REPORTED THAT THE INITIAL INVITATION, ISSUED ON SEPTEMBER 4, 1970, REQUESTED BIDS FOR THE PREPARATION OF PERSONAL PROPERTY FOR MOVING OR STORAGE, DRAYAGE AND RELATED SERVICES AS ORDERED BY SEVEN DIFFERENT GOVERNMENT ACTIVITIES DURING CALENDAR YEAR 1971. THE SERVICES WERE DIVIDED INTO THREE SCHEDULES: SCHEDULE I - OUTBOUND SERVICES; SCHEDULE II - INBOUND SERVICES; AND SCHEDULE III - INTRA-AREA AND INTER-AREA MOVES. LISTED UNDER EACH OF THE SCHEDULES WERE SEVEN DIFFERENT GEOGRAPHIC AREAS OF PERFORMANCE AND NUMEROUS ITEMS OF SERVICE. PARAGRAPH D1(A) OF THE INVITATION PROVIDED THAT BIDS WOULD BE EVALUATED ON THE BASIS OF TOTAL AGGREGATE PRICE OF ALL ITEMS WITHIN AN AREA OF PERFORMANCE UNDER A GIVEN SCHEDULE. IT IS FURTHER REPORTED THAT THE ESTIMATED QUANTITIES FOR EACH AREA WERE OBTAINED BY THE PROCURING ACTIVITY FROM THE SEVEN ORDERING ACTIVITIES.

INVITATIONS TO BID WERE SENT TO 51 FIRMS, OF WHICH NUMBER 14 SUBMITTED BIDS BY THE DATE SET FOR OPENING ON OCTOBER 2, 1970. HOWEVER, ONLY AMERICAN AND GOODWIN MOVING & STORAGE (GOODWIN) SUBMITTED BIDS FOR AREA II (ON AN ALL OR NONE BASIS), WHICH WERE AS FOLLOWS:

GOODWIN:

SCHEDULE I $ 70,910.00

SCHEDULE II 23,176.50

SCHEDULE III 175,200.00

269,286.50

DISCOUNT 0.50 OF 1.00% 20 DAYS -1,346.44

$267,940.06

AMERICAN:

SCHEDULE I $ 48,932.20

SCHEDULE II 14,508.00

SCHEDULE III 200,190.00

263,630.20

DISCOUNT 1.00% 20 DAYS -2,636.30

260,993.90

WHILE THE TOTAL AGGREGATE PRICES WERE VERY CLOSE, UNDER ITEM 1A(1) OF AREA II, SCHEDULE I, AMERICAN BID 10 CENTS PER CWT., WHILE GOODWIN'S BID FOR THE SAME ITEM WAS $5 PER CWT. BECAUSE OF THIS WIDE DIFFERENCE IN UNIT PRICES, AMERICAN WAS ASKED TO VERIFY ITS BID FOR THAT ITEM. BY AN UNDATED LETTER RECEIVED AT THE PROCURING ACTIVITY ON NOVEMBER 16, 1970, AMERICAN VERIFIED ITS BID PRICE ON THIS AND ALL OTHER ITEMS. AT ABOUT THE SAME TIME, GOODWIN ADVISED THE SUPPLY CENTER THAT ITS RESEARCH DISCLOSED THAT UNDER THE EXISTING CONTRACT FOR CALENDAR YEAR 1970, HELD BY AMERICAN, ITEM 1A(1) OF AREA II WAS NOT BEING USED, ESPECIALLY SINCE JUNE 1970, AND THE REASON FOR AMERICAN'S CURRENT BID OF 10 CENTS ON THIS ITEM WAS THAT IT APPARENTLY DID NOT INTEND TO DO ANY VOLUME OF WORK THEREUNDER. SINCE HAMILTON AIR FORCE BASE WAS THE PRIMARY USER OF AREA II, THAT ACTIVITY WAS REQUESTED TO VERIFY ITS ESTIMATED QUANTITY FOR ITEM 1A(1). IN A LETTER DATED NOVEMBER 25, 1970, HAMILTON REQUESTED THAT THE QUANTITY FOR THAT ITEM BE CORRECTED FROM 330,000 POUNDS TO 150,000 POUNDS AND IN THE SAME LETTER VERIFIED THE ESTIMATED QUANTITIES PREVIOUSLY FURNISHED FOR THE OTHER ITEMS IN ITS AREA.

FOR INFORMATION PURPOSES, BID PRICES WERE THEN RECOMPUTED BY THE PROCUREMENT ACTIVITY USING THE CORRECTED QUANTITY. ASSUMING THAT THE SAME BID PRICES WOULD HAVE BEEN OFFERED HAD THE PROPER ESTIMATE BEEN USED FOR ITEM 1A(1), GOODWIN WOULD HAVE DISPLACED AMERICAN AS THE LOW BIDDER. VIEW OF THESE CIRCUMSTANCES, AND SINCE THE QUANTITY SHOWN IN THE INVITATION WAS MORE THAN 100 PER CENT HIGHER THAN THE REVISED ESTIMATE, AND BECAUSE BOTH AMERICAN AND GOODWIN HAD BID "ALL OR NONE" FOR AREA II, IT WAS DETERMINED BY THE CONTRACTING OFFICER, PURSUANT TO SECTION 2- 404.1(B) OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR), TO CANCEL AREA II FROM ALL THREE SCHEDULES OF THE INVITATION AND READVERTISE.

THE SECOND INVITATION, WITH A REVISED ESTIMATE FOR ITEM 1A(1), SCHEDULE I, WAS ISSUED ON DECEMBER 4, 1970. DURING A TELEPHONE CONVERSATION WITH THE PROCURING ACTIVITY ON DECEMBER 9, 1970, AMERICAN ADVISED THAT IT BELIEVED THE QUANTITY OF 2050 GROSS HUNDREDWEIGHT LISTED FOR ITEM 1B(1) OF AREA II, SCHEDULE I, TO BE INCORRECT. HAMILTON AIR FORCES BASE SUBSEQUENTLY ADVISED THAT ITS ESTIMATE ON THIS ITEM WAS ALSO IN ERROR, AND BY AMENDMENT THE ESTIMATE WAS CHANGED TO 50 GROSS HUNDREDWEIGHT.

THE BIDS UNDER THE SECOND INVITATION WERE OPENED ON DECEMBER 17, 1970, EVEN THOUGH AMERICAN HAD PROTESTED ON DECEMBER 14, 1970, TO THE CONTRACTING OFFICER AGAINST THE CANCELLATION OF AREA II IN THE FIRST INVITATION AND HIS FAILURE TO AWARD A CONTRACT TO AMERICAN UNDER THAT INVITATION. AGAIN, AMERICAN AND GOODWIN, BOTH QUOTING ON AN "ALL OR NONE" BASIS WERE THE ONLY TWO BIDDERS. THEIR BIDS, AS EVALUATED, WERE AS FOLLOWS:

GOODWIN:

SCHEDULE I $ 48,094.00

SCHEDULE II 13,733.75

SCHEDULE III 175,200.00

237,027.75

DISCOUNT 0.50 OF 1.00% 20 DAYS -1,185.14

$235,842.61

AMERICAN:

SCHEDULE I $ 48,901.50

SCHEDULE II 11,217.00

SCHEDULE III 181,490.00

241,608.50

DISCOUNT 1.00% 20 DAYS -2,416.09

$239,192.41

FOR ITEM 1A(1) GOODWIN HAD REDUCED ITS UNIT PRICE FROM $5 TO $4 PER CWT., WHILE AMERICAN RAISED ITS UNIT PRICE FOR THIS ITEM FROM 10 CENTS TO $5 PER CWT.

BEFORE AMERICAN'S PROTEST OF DECEMBER 14, 1970, ON THE FIRST IFB WAS RESOLVED, IT FILED WITH THE CONTRACTING OFFICER ON DECEMBER 21, 1970, A PROTEST AGAINST THE SECOND INVITATION, A COPY OF WHICH WAS FURNISHED OUR OFFICE BY THE ATTORNEY FOR AMERICAN. IN THE DECEMBER 14 PROTEST AMERICAN CONTENDED THAT DURING THE CALENDAR YEARS 1969 AND 1970, FOR WHICH PERIOD IT WAS THE HOLDER OF THE CONTRACT, THERE HAD BEEN NO "FLUCTUATION" BETWEEN THE ESTIMATED AMOUNTS AND THE AMOUNTS ORDERED, AND THAT THE QUANTITIES WHICH MIGHT BE ORDERED FOR ITEM 1A(1) COULD SUBSTANTIALLY EXCEED THE ESTIMATE OF 330,000 POUNDS IN THE CANCELED IFB, IF THE SUCCESSFUL BIDDER'S BID WAS LOW ENOUGH FOR THAT PARTICULAR ITEM.

IN SUPPORT OF THIS CONTENTION IT WAS POINTED OUT THAT FOR THE YEARS 1969 AND 1970 AMERICAN PERFORMED PACK AND CRATE SERVICES UNDER ITS GOVERNMENT CONTRACTS ON 36,885 POUNDS AND 94,467 POUNDS OF HOUSEHOLD GOODS, RESPECTIVELY, FOR HAMILTON AIR FORCE BASE AND ALSO PERFORMED SUCH SERVICES DURING THOSE YEARS ON HOUSEHOLD GOODS FROM THAT BASE IN THE AMOUNTS OF 242,565 POUNDS AND 175,143 POUNDS AS ORIGIN AGENT FOR THRU-BILL-OF-LADING CARRIERS. IT WAS ALLEGED THAT IT COULD BE MORE BENEFICIAL TO THE GOVERNMENT TO ORDER ALL OF THE SERVICES THRU A GOVERNMENT PACK AND CRATE CONTRACTOR AT AN EXCEPTIONALLY LOW PRICE, AND THAT OTHER INSTALLATIONS, IN ADDITION TO HAMILTON, COULD PLACE ORDERS FOR THE SERVICES AND RECEIVE THE BENEFIT OF THE LOW PRICE. WHILE THE ACTIVITY STATES THAT IT IS IMPOSSIBLE TO DETERMINE WHETHER AMERICAN'S CONTENTION WOULD HAVE PROVED TO BE TRUE, THE ACTIVITY NOTES THAT AMERICAN'S 1970 CONTRACT PRICE OF $1.50 PER CWT. FOR ITEM 1A(1) WAS CONSIDERABLY LOWER THAN THE THRU-BILL-OF-LADING METHOD UNDER WHICH AMERICAN PERFORMED MOST OF SUCH SERVICES.

IN THE DECEMBER 21 PROTEST LETTER, WHICH FORMED THE BASIS OF AMERICAN'S PROTEST BEFORE OUR OFFICE, THE CANCELLATION OF AREA II OF THE FIRST INVITATION IS AGAIN QUESTIONED. ADDITIONALLY, IT IS URGED THAT THE SECOND INVITATION SHOULD BE CANCELED. WE HAVE BEEN INFORMED THAT THE EXISTING CONTRACT WHICH AMERICAN HOLDS HAS BEEN EXTENDED PENDING A RESOLUTION OF THE INSTANT PROTEST.

CONCERNING CANCELLATION OF THE FIRST INVITATION, AMERICAN ARGUES THAT THE PROCURING ACTIVITY HONORED A PROTEST FROM A DISQUALIFIED BIDDER, IN THAT GOODWIN DID NOT HOLD THE NECESSARY INTERSTATE COMMERCE COMMISSION (ICC) OPERATING AUTHORITY FOR THE AREAS INVOLVED, WHICH THE INVITATION REQUIRED A BIDDER TO HOLD "IN HIS OWN NAME." IN RESPONSE TO THIS ARGUMENT THE ADMINISTRATIVE REPORT TO OUR OFFICE STATES:

AS SHOWN IN EXHIBIT A ATTACHED TO AMERICAN'S PROTEST LETTER OF 21 DECEMBER 1970, GOODWIN HOLDS I.C.C. AUTHORITY FOR POINTS WITHIN 50 MILES OF VALLEJO, CALIFORNIA. THAT 50 MILE RADIUS COVERS ALL OF MARIN COUNTY AND MORE THAN HALF OF SONOMA COUNTY. BY VOLUME, MORE THAN 90% OF AREA II REQUIREMENTS WOULD FALL WITHIN THE AREA COVERED BY GOODWIN'S I.C.C. AUTHORITY. GEOGRAPHICALLY, GOODWIN'S I.C.C. AUTHORITY COVERS ABOUT 75% OF AREA II. FURTHER, THE CONTRACT CLAUSE ENTITLED "SUBCONTRACTING" INDICATES THAT REQUIREMENTS MAY BE SUBCONTRACTED, PROVIDED THE SUBCONTRACT IS APPROVED BY THE CONTRACTING OFFICER. BY LETTER OF 28 DECEMBER 1970, ENCLOSURE *** , GOODWIN REQUESTED AUTHORITY TO SUBCONTRACT FOR ANY TONNAGE OUTSIDE THE SCOPE OF THEIR I.C.C. AUTHORIZATION. IT IS THE OPINION OF COUNSEL FOR THIS ACTIVITY THAT GOODWIN MEETS THE REQUIREMENTS OF THE INVITATION WITH RESPECT TO THE I.C.C. OPERATING AUTHORITY.

WITHOUT DECIDING, FOR THE PRESENT, WHETHER GOODWIN WAS, OR WAS NOT, A QUALIFIED BIDDER, WE THINK THAT ANY BIDDER MAY PROPERLY BRING TO THE ATTENTION OF THE CONCERNED GOVERNMENT OFFICIALS ANY FACTOR INDICATING THAT A PARTICULAR PROCUREMENT ACTION IS DEFECTIVE. WE HAVE REPEATEDLY OBSERVED THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER OR PROSPECTIVE BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR COMPELLING OR COGENT REASONS. HOWEVER, IN THE INSTANT CASE WE BELIEVE THERE WAS A PROPER BASIS FOR CANCELLATION OF AREA II IN THE FIRST INVITATION, SINCE THE PURPOSE OF THE CANCELLATION WAS TO MAKE A SUBSTANTIAL REDUCTION IN AN INCORRECT ESTIMATE OF THE GOVERNMENT'S NEEDS ON WHICH THE BIDS WERE TO BE BASED. ADDITION, SINCE AMERICAN'S CLAIM IN ITS DECEMBER 21 LETTER (THAT ITEMS 3A(1), 3B(2), 29A AND 29B OF SCHEDULES I AND II OF AREA II IN THE SECOND INVITATION CONTAINED SUBSTANTIAL INACCURACIES IN THE ESTIMATED QUANTITIES) HAS BEEN VERIFIED, IT APPEARS THAT THE SAME COGENT REASON ALSO EXISTS FOR CANCELLATION OF THE SECOND INVITATION. SEE 49 COMP. GEN. 584 (1970).

WITH RESPECT TO WHETHER GOODWIN IS QUALIFIED FOR AN AWARD, THE FIRST INVITATION REQUIRED A BIDDER TO CERTIFY THAT HE POSSESSED THE NECESSARY ICC AUTHORITY IN HIS OWN NAME, AND THE SECOND INVITATION PROVIDES:

OPERATING AUTHORITIES

THE BIDDER REPRESENTS THAT HE HOLDS, OR WILL OBTAIN PRIOR TO AWARD, ALL NECESSARY OPERATING AUTHORITIES (FEDERAL, STATE, AND LOCAL) IN HIS OWN NAME.

AS INDICATED ABOVE, GOODWIN'S ICC OPERATING AUTHORITY COVERS ONLY ABOUT 75 PERCENT OF THE GEOGRAPHICAL AREA OF AREA II, AND ONLY ABOUT 90 PERCENT BY VOLUME OF THE ANTICIPATED REQUIREMENTS. GOODWIN PROPOSES TO SUBCONTRACT THOSE SERVICES OUTSIDE THE SCOPE OF ITS ICC AUTHORITY, AND IT IS THE OPINION OF THE PROCURING ACTIVITY THAT THE SUBCONTRACTING PROVISIONS OF THE IFB SHOULD BE CONSTRUED TO PERMIT GOODWIN TO QUALIFY IN THIS MANNER. IN THIS CONNECTION, PARAGRAPH C47 OF THE SECOND INVITATION STATES:

THE CONTRACTOR SHALL NOT SUBCONTRACT WITHOUT THE PRIOR WRITTEN APPROVAL OF THE CONTRACTING OFFICER. THE FACILITIES OF ANY APPROVED SUBCONTRACTOR SHALL MEET THE MINIMUM STANDARDS REQUIRED BY THIS CONTRACT.

IT IS OUR OPINION THAT THE REPRESENTATION AS TO POSSESSION OF "ALL NECESSARY OPERATING AUTHORITIES *** IN HIS OWN NAME" IN THE OPERATING AUTHORITIES CLAUSE QUOTED ABOVE, LEAVES NO ROOM FOR CONSTRUCTION. THE PHRASE IS SPECIFIC AND, ALTHOUGH THE SUBCONTRACT CLAUSE PERMITS A QUALIFIED BIDDER WHO HAS BEEN AWARDED A CONTRACT TO SUBCONTRACT WITH THE PRIOR APPROVAL OF THE CONTRACTING OFFICER, THAT CLAUSE DOES NOT PURPORT TO MODIFY THE PROVISION REQUIRING A PROSPECTIVE CONTRACTOR TO POSSESS THE NECESSARY OPERATING AUTHORITY PRIOR TO AWARD. WE BELIEVE THAT THE OPERATING AUTHORITIES CLAUSE CAN BE REASONABLY INTERPRETED ONLY TO MEAN THAT THE PROSPECTIVE CONTRACTOR MUST HOLD, IN HIS OWN NAME AT THE TIME OF AWARD, ALL NECESSARY OPERATING PERMITS AS MAY BE REQUIRED FOR THAT CONTRACTOR TO COMPLETELY AND FULLY PERFORM ALL OF THE SERVICES REQUIRED BY THE CONTRACT. SEE 36 COMP. GEN. 649 (1957). THE QUALIFICATIONS OF A PROSPECTIVE CONTRACTOR ARE A MATTER OF RESPONSIBILITY, AND ASPR 1-904.1 PROVIDES THAT NO CONTRACT SHALL BE AWARDED TO ANY PERSON OR FIRM UNLESS THE CONTRACTING OFFICER FIRST MAKES AN AFFIRMATIVE DETERMINATION THAT THE PROSPECTIVE CONTRACTOR IS RESPONSIBLE. UNDER THE PROVISIONS OF THE IFB AS SET OUT ABOVE, IT IS OUR OPINION THAT GOODWIN COULD NOT PROPERLY BE DETERMINED TO BE A RESPONSIBLE BIDDER UNLESS GOODWIN THEN HELD ADEQUATE ICC OPERATING AUTHORITY.

WITH RESPECT TO WHETHER AN AWARD CAN BE MADE TO AMERICAN, WE NOTE THAT ALTHOUGH THE INVITATIONS REQUIRED THE PROSPECTIVE CONTRACTORS TO HAVE ALL NECESSARY ICC AND OTHER AUTHORITY AT THE TIME OF AWARD, THE CONTRACTING OFFICER RECOMMENDED THE AWARD ON THE SECOND INVITATION BE MADE TO GOODWIN EVEN THOUGH GOODWIN DOES NOT HAVE THE ICC AUTHORITY NECESSARY TO PERFORM ALL OF THE SERVICES REQUIRED BY THE INVITATION, AND INTENDS TO SUBCONTRACT THOSE SERVICES FOR WHICH IT DOES NOT HAVE THE NECESSARY AUTHORITY. THEREFORE APPEARS THAT THE POSSESSION OF FULL ICC AUTHORITY BY THE CONTRACTOR CANNOT BE CONSIDERED ESSENTIAL BY THE PROCURING ACTIVITY TO SATISFACTORY PERFORMANCE OF THE CONTRACT. IT FOLLOWS THAT THE REQUIREMENT FOR SUCH AUTHORITY, AS SET OUT IN THE IFB, MUST BE REGARDED AS UNDULY RESTRICTIVE OF COMPETITION AS TO ANY PROSPECTIVE BIDDER WHO NEITHER HAS SUCH AUTHORITY NOR PROPOSES TO OBTAIN IT PRIOR TO AWARD. IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT THE SECOND INVITATION (NO. N66314-71-B- 1148) MUST ALSO BE CANCELED, AND NEW BIDS SOLICITED FOR AREA II UNDER AN INVITATION WHICH INCLUDES THE BEST ESTIMATES AVAILABLE AND SUCH MODIFICATIONS OR AMENDMENTS TO THE INVITATION AS MAY BE NECESSARY TO ADVISE BIDDERS OF NAVY'S ACTUAL REQUIREMENTS CONCERNING ICC AND OTHER OPERATING AUTHORITY FOR THE SERVICES COVERED BY THE INVITATION.

THE DOCUMENTS FURNISHED WITH THE REPORT OF FEBRUARY 1 ARE RETURNED.